Trauma insurance fills the gaps

Heart disease and stroke continue to be the two most common causes of death in Australia for people over the age of 45, and accounted for over 30,000 Australian fatalities in 2012.

Incredibly, thousands of Australians are underinsured or have no risk insurance in place to cover the expenses should they suffer a debilitating illness.

According to the Cost of Cancer in NSW2 report, the total expected lifetime economic cost of cancer – taking into account both the financial cost and the burden of disease (for example, lost productivity and burden on the healthcare system) – is almost $1m per person. Certainly for an individual being treated for cancer, out of pocket costs in excess of $100,000 are not uncommon. Many advisers use a rule of thumb for calculating an appropriate sum insured which at minimum should allow for the removal of debt and the provision of one year’s income, but this is merely a starting point.

These initial figures should be considered along with the financial cost to the individual and family, and importantly the ‘true cost’ of the disease.

You can rely on trauma insurance

Trauma insurance can cover between 10 to 50 medical events and will pay in the event you suffer a defined health trauma, regardless of your work status. It pays a lump sum to help cope and recover from serious health conditions such as cancer, stroke and heart attack. Some insurers also offer partial payments for less serious conditions.

Medical advances have meant that our chances of surviving traumatic events are much better than in the past. However, the cost of treatment can sometimes be beyond your normal means. Without trauma cover, you may need to dip into your children’s education fund or your retirement savings; or you might even have to increase your mortgage to pay for expensive treatment.

The difference from trauma insurance to income protection

Importantly, a trauma payment is not dependent on you being unfit to work (unlike income protection, where you need a doctor to certify your ongoing health). The diagnosis of a traumatic condition might mean that you physically could go to work, but would prefer to spend time with your family and reduce any work-related stress while you recover and consider how your future will be affected.

To make sure you don’t increase the statistics, check your policy documents to see which level of cover you hold, and speak to your financial adviser if you are unsure. They can help you determine what cover you already have, what changes or additions may be appropriate and how to make them.